Depreciation of yen threatens Japan's economy: expert

A continuously weakening Japanese yen against the U.S. dollar has put a strain on Japan's economy, while the government is faced with challenges in combating the sustained depreciation, according to a local economist.

In a recent interview with China Central Television (CCTV), Hideo Kumano, chief economist of the Economic Research Department at the Dai-ichi Life Research Institute, said that a weaker yen is theoretically a boon for Japanese exporters, but meanwhile, prices will rise for fuel and raw material imports, leading to an increase in their production costs. Data released Wednesday by Japan's Ministry of Finance show that the country logged a trade deficit for the third straight year in fiscal 2023.

Kumano said that such a sustained yen depreciation will hardly bring benefits to Japanese companies and the economy.

"In fact, few people think that such a depreciation of the yen will be beneficial to export companies. On the other hand, for consumers, if the yen depreciates, the prices of imported goods will rise. The prices of food and gasoline and other fuels, which have finally stabilized, will continue to rise. For consumers, yen depreciation has obvious disadvantages," he said.

Kumano said that if the Bank of Japan raises interest rates in response to the currency depreciation, the Japanese government will face mounting pressure from interest payments as its debt is huge. Therefore, Japan has not much room for maneuver.

"If Japan's economic outlook worsens in the future and the Bank of Japan raises interest rates, debt interest payments will increase, which will cause problems at the political level. This will be a very critical issue," he said.

The finance ministers of Japan, the U.S. and South Korea held talks in Washington on Wednesday, exchanging views on financial market trends and other issues.

Kumano said that although Japan's finance ministry is expected to intervene in the exchange rate, there is great uncertainty about whether the move aiming to narrow the interest rate gap between Japan and the United States can obtain external support from other countries, especially monetary policy support from the U.S.

Depreciation of yen threatens Japan's economy: expert

Depreciation of yen threatens Japan's economy: expert

At least 181 people have been killed in devastating flooding triggered by heavy rains in Kenya, the government said on Wednesday.

Government spokesman Isaac Mwaura said that 90 people were reported missing nationwide, and 124 people have been injured and are receiving treatment in various health facilities.

The heavy rains and flooding have displaced 188,000 people, prompting the government to establish a displacement camp to provide alternative accommodation, he said in a statement issued in Nairobi, the capital of Kenya.

The government has put in place measures to support evacuation and temporary shelter for those affected, with public spaces identified for temporary shelter and provision of essential supplies.

The Cabinet also disclosed that water levels at Masinga and Kiambere dams have reached historic highs. Masinga recorded its highest levels ever, surpassing those recorded on May 7, 2020. Similarly, Kiambere Dam registered its highest levels ever on April 26, surpassing the previous historic levels recorded on Nov 29, 1997.

A dam burst on Sunday night in the town of Mai Mahiu, about 60 kilometers north of Nairobi, killed 48 people and affected many others. Meantime, the resultant effects downstream, especially in Garissa and Tana River counties in eastern Kenya, could worsen the already dire situation, the Cabinet said.

Large swathes of land along Kenya's longest Tana River are currently submerged, displacing thousands of people and impacting lives and livelihoods.

Residents of the two affected counties and those living near other dams and water reservoirs must evacuate in accordance with the Cabinet's directive.

Rescue workers fear that the death toll could rise as the ongoing heavy rainfall is expected to continue this week, with floods and landslides predicted in some areas. Roads and bridges have been washed away, leaving several parts of the country inaccessible and disrupting business. The government's national multi-agency emergency response committee is working on various initiatives to help those affected by the floods.

Death toll from Kenya floods reaches 181, evacuations underway